Britain's economy shrank by a shock 0.5 percent in the fourth quarter of 2010, dashing expectations for growth, as freezing weather sparked the first contraction since 2009, data showed today.
Gross domestic product (GDP) fell 0.5 percent in the three months to December, after expansion of 0.7 percent in the third quarter, the Office for National Statistics (ONS) said in a statement giving its initial estimate.
That was the first drop since the third quarter of 2009 and confounded expectations for modest growth of 0.4 percent in the fourth quarter, according to analysts polled by Dow Jones Newswires.
"The change in GDP in the fourth quarter was clearly affected by the extremely bad weather in December last year," the ONS added.
"The disruption caused by the bad weather in December is likely to have contributed to most of the 0.5-percent decline, that is, if there had been no disruption, GDP would be showing a flattish picture rather than declining.
"We should emphasise that this assessment of the effect of the bad weather is the best we can make it at this stage, but is still inevitably uncertain."
The unexpected drop, which has ended one year of growth, has reignited market concerns that the country could be heading for a double-dip recession, according to analysts.
Britain emerged from a record-length recession in late 2009 but many economists remain fearful that state austerity measures could spark a second downturn.
"The GDP figure is quite simply a shock to the system and heightens fears that the coalition government's austerity plan may well curb growth too excessively and send the UK into a double dip recession," said City Index analyst Joshua Raymond at City Index in London.
Business Secretary Vince Cable, speaking prior to release of the data, said that the fourth quarter had been "pretty bad" because of the impact of the country's harsh winter.
"There is a reasonable consensus that this is a pretty bad quarter, for reasons that are primarily to do with climate, actually," Cable said.
"It was very bad and it's clearly had a significant effect on construction and other weather-dependent industries. I don't think anybody expects this will be a good quarter."